| Definition |
Benchmarking is a method of improving performance by identifying and implementing best demonstrated practices. Managers compare the performance of their products or processes to competitors, best-in-class companies and areas within their own firms that perform similar activities. The objective of Benchmarking is to find examples of superior performance and understand the processes and practices driving that performance. Companies then improve their performance by tailoring and incorporating the best practices into their own operations. |
| Implementation |
Benchmarking involves the following steps:
- Select a product, service or process to benchmark
- Identify the key performance metrics
- Choose companies or internal areas to benchmark
- Collect data on performance and practices
- Analyse the data and identify opportunities for improvement
- Adapt and implement the best practices
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| Purpose |
Companies use Benchmarking to:
- Improve performance:
Benchmarking identifies methods of improving operational efficiency and product design.
- Understand relative cost position:
Benchmarking reveals a companys relative cost position and identifies opportunities for improvement.
- Gain strategic advantage:
Benchmarking helps companies focus on capabilities critical to building strategic advantage.
- Increase the rate of organisational learning:
Benchmarking brings new ideas into the company and facilitates experience sharing.
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